Market barometer's mercury rising as 1997 ends
Nashville Business Journal - by Richard Lawson
Times are good for Nashville's real estate industry. The haunting ghosts of real estate past have been relegated to the deep recesses of memory.
For the moment, Scrooge hasn't spoiled the market by being stingy with commercial real estate deals.
To see just how well the industry is doing, just look to the holiday parties real estate companies throw this time of year.
The annual holiday party sponsored by the Nashville office of Memphis-based real estate firm Weston Cos. sort of acts as a de facto barometer for the state of the industry.
Last year was a good year as the Nashville real estate market emerged from the blues of the early 1990s. Weston held its party at the Nashville City Club on the top floor of the SunTrust Bank Building.
It was a nice spread with lots of food, including the telltale sign that things are doing well -- lots of big shrimp.
Real estate officials report that when the industry tanked in the early 1990s the first luxury to go was the shrimp. I recall them saying that the crustacean was replaced by peanut butter and jelly finger sandwiches washed down with fruit punch.
Nevertheless, Weston's party this year was much grander and clearly more expensive. In fact, it was held in the Grand Ballroom of the Westin Hermitage Hotel.
The tables were considerably longer than the ones of the previous year and had more food, especially shrimp. There was even a band this year.
I only heard one complaint -- there was only one bar, which meant long lines because more people attended this year. And, apparently they ran out of Scotch.
Looking past just the parties, statistics show this year was the year for construction of office and industrial space, thanks to strong demand in 1996 for existing space.
Acquisition of existing buildings has slowed. Most everything in the office and industrial market sold in late 1996.
Fueled by strong economic growth, the strong demand pushed rents up and brought down vacancy rates, justifying new construction.
Office developers, largely the REITs, began to aggressively build new premium office buildings, mostly in the suburbs.
Raleigh, N.C.-based Highwoods Properties was the most active. It opened or has under construction 375,000 square feet of office space in Brentwood's Maryland Farms Office Park.
Highwoods has broken ground on the first of two buildings in Franklin's Cool Springs.
"We have enough land to develop 1 million square feet of office space over time," says Brian Reames, regional vice president in Highwoods' Nashville office.
The REIT is going head-to-head with Charlotte-based Crescent Resources, which was the office pioneer in Cool Springs in 1996 with a 132,000-square-foot building. It opened in March and was leased by December 1996.
Crescent has finished a second building measuring 153,000 square feet and has broken ground on two more buildings for 300,000 square feet. Three more buildings are planned, which could bring Crescent's total to about 1 million square feet
Indianapolis-based REIT Duke Realty Investments kicked off a 450,000-square-foot project in Maryland Farms called Creekside Crossing. It has broken ground on a 112,800-square-foot building.
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